How to Form an LLC in Virginia in 7 Steps
A limited liability company (LLC) is an excellent legal structure for many small businesses. LLCs offer personal liability protection, tax advantages, and convenience. Forming an LLC in Virginia is easy if you follow the step-by-step process below.
7 Steps to Form an LLC in Virginia
Name Your LLC
Choose an original and memorable LLC name to help your business stand out from the competition. You also must be sure to follow Virginia's naming rules. According to the Virginia Limited Liability Company Act, your Virginia LLC name must:
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- Make it clear that your business is an LLC: Your LLC business name must contain the words "Limited Liability Company" or "Limited Company." If you prefer, you can use the abbreviation "LLC," L.L.C.," "LC," or "L.C."
- Be available: Your name must be available. In other words, it must differ from the names of all other registered Virginia businesses.
- Not contain restricted language: Your company name may not contain language that incorrectly implies that the business is a corporation or other type of business structure.
Check for Name Availability in Virginia
You can search for availability by running an entity name search on the Virginia Clerk's Information System (CIS) website. If there are any exact or confusingly similar matches, you should choose a new name. While visiting this website, creating an account is a good idea. You can use these login credentials to file your articles of organization in step three below.
Search the Name on the Internet
Next, you should run an internet screening search. You can type your desired name into your favorite search engine for a quick and easy way of finding out if any businesses use your LLC name. If you come up with any matches, you should go back to the drawing board and think of a unique name.
Check for Trademarks
Finally, you should ensure that no other companies have trademarked your name. The United States Patent and Trademark Office (USPTO) offers a searchable database of trademarks for this purpose. This will help you avoid legal trouble for trademark infringement.
Protect Your Name
Once you know your name is unique and not encumbered by a trademark or domain name registration, you may want to protect it so others can't use it.
- Reserve Your Name. You can reserve your LLC name before you officially form your LLC. To do this, you must submit a business entity name reservation form (Form SCC631). The form contains instructions for submitting by mail or online. You will need to include a $10 state fee. This will reserve your name for 120 days.
- Register a trademark. To protect your brand, you may register your business name as a trademark with the USPTO or the Virginia State Corporation Commission. To file a Virginia trademark, complete the Application for Registration of a Trademark or Service Mark (Form TM-1) and pay a $30 registration fee.
- Register a domain name. You can also register the business name as a domain name. Then you have rights to that domain. Find a domain name registrar from an approved ICANN registrar list.
Get a Registered Agent
All Virginia LLCs must have a registered agent. A registered agent is an individual or an entity that accepts legal paperwork on behalf of your LLC. If someone sues your LLC, the service of process will go to the registered agent.
Under state law, your Virginia registered agent must be:
- An owner or officer of your business
- A licensed attorney in the state of Virginia
- Another business entity that is licensed to operate in Virginia
Your registered agent must have a physical street address (not a P.O. Box) in Virginia. This address is known as your registered office. The registered agent should generally be available to accept legal documents there during business days at standard business hours.
You can be your own registered agent. However, if no LLC members or officers can act as your registered agent, consider using a professional registered agent service.
File Your Articles of Organization
To officially form your Virginia LLC, you need to submit a document called articles of organization to the Virginia State Corporation Commission. Articles of organization are like a charter that lays out the main identifying characteristics of your business.
In the articles of organization, you will provide specific basic company details:
- Your LLC's name
- Your registered agent's name and registered office address
- The address of your principal office
Your registered agent must have a physical street address in the Commonwealth of Virginia. However, your principal office can be outside of Virginia. Your principal office address is where you keep your important company documents.
To complete the articles of organization yourself, fill out the Virginia articles of organization form (Form LLC-1011) and submit it to the Corporation Commission or file it online. The filing fee is $100.
Draft an Operating Agreement
Although Virginia doesn't require an LLC operating agreement by law, creating one is a good idea. An LLC operating agreement is an internal company document that forms a contract among your LLC members. You can use your operating agreement to put certain critical issues into writing, such as:
- Your LLC's purpose
- Ownership percentages
- Member rights and responsibilities
- A buyout agreement
- Voting procedures
- A procedure for dissolving the LLC, if necessary
- Any other agreements that are important to your LLC members
Having an operating agreement in place will promote more organized company operations. You may need to show this agreement when opening a business bank account or seeking investments. Certain professionals may ask to see your operating agreement before providing your Virginia LLC with services.
Even single-member LLCs should have an operating agreement. Although your single-member LLC will not need to create agreements among members, your operating agreement is a crucial company document. It shows that you treat the LLC as a legal entity separate from yourself. This helps to maintain your limited liability status.
Get an EIN
An EIN is a unique number that the Internal Revenue Service (IRS) issues to companies to identify them for tax purposes. You will need your EIN for the following:
- Employee payroll
- State and federal tax withholding and tax returns
- Opening a business bank account
- Applying for a company credit card
You can think of an EIN as a Social Security number for your business. It's easy and free to get an EIN from the IRS website. You can apply by mail, fax, or online.
Set Up Business and Tax Accounts
Your business tax and licensing obligations will vary based on your LLC's location and the type of business you operate. Complying with these obligations is crucial to avoid legal hassles and penalties.
Virginia's Business OneStop provides a helpful flow chart that overviews your state and local tax and licensing requirements.
File Beneficial Ownership Information Report (BOIR)
Your Virginia LLC must file a Beneficial Ownership Information Report (BOIR) with FinCEN. Filing a BOIR is a new requirement under federal law. For LLCs created in 2024, you must file within 90 days from the day your LLC receives notice of its creation or 90 days from the day the Secretary of State or similar office first provides public notice of your company’s creation/registration, whichever is sooner. If you form your LLC after January 1, 2025, the timeline narrows from 90 days to 30 days.
BOIRs are both prepared and filed at www.fincen.gov/boi. To prepare your BOIR, you must provide information regarding your LLC, its beneficial owners, and its applicants. People who have substantial control over your LLC and/or own a minimum of 25% of the ownership interests of your LLC are beneficial owners. The people who directly filed the document that created the LLC or were responsible for controlling the filing are applicants.
When you set up a business in Virginia, you are responsible for state taxes if your LLC is to be taxed as a corporation, state employer taxes if you have employees, sales and use taxes if you sell to the public, and business licenses and permits. Register your LLC with the Virginia Tax Online Services to set up your tax accounts. To register with the Virginia Department of Taxation, you will need an Employer Identification Number (EIN).
State Business Tax
There are different ways to tax an LLC. If you set up your LLC for pass-through taxation, the LLC's profits go on the members' individual income tax returns. There is no state tax. However, if your LLC elects for taxation as a corporation, your LLC pays a corporate state tax rate on the LLC's net income.
State Employer Tax
You are responsible for withholding taxes and other obligations if you hire employees. You register for employee withholding tax and unemployment tax on the Virginia Tax website. In addition, as an employer, you must:
- Report all new hires within 20 days of the hire date to the Virginia New Hire Reporting Center.
- Register for worker's compensation if you have two or more employees.
Sales and Use Taxes
If you sell goods and services in Virginia, you may need to register for a seller's permit to charge and collect sales tax. The sales tax you charge depends on where you operate your business. Look up sales tax rates with the Virginia tax department.
Business Licenses and Permits
To learn about your local licensing requirements, you should contact the city or county clerk's office of your LLC's primary place of business. You can find contact information for your local agencies by visiting the Commissioners of the Revenue Association of Virginia.
Depending on the nature of your business, you may even need a federal license. Federal licensing requirements are limited to specific business activities, including aviation, broadcasting, mining, and others. You should visit the Small Business Administration (SBA) website to see a complete list of business activities requiring a federal license.
Although Virginia does not require LLCs to file an annual report, you will need to pay a $50 annual registration fee to keep your LLC in good standing. You must pay your annual fee every year after the year you established your LLC. The due date will be the last day of the month that you created your LLC. For instance, if you started your LLC in November 2022, your first annual fee will be due by November 30, 2023. You will also pay your annual fee by the end of July every year after that.
The Corporation Commission will send advance notice of your annual fee to your registered agent. But it's wise to mark your calendar to pay your yearly fee rather than relying on this notice. You can pay your fee using the login credentials you may have created at the CIS website in step one above. The State Corporation Commission provides additional information on payment options and plans.